Banks write off BDT 9.2 billion more in bad debts in April-June
The country’s banking sector wrote off another BDT 9.21 billion in bad debts in the April-June period of this year with The City Bank and Prime Bank leading the way. The amount of bad debts written off by banks increased by Tk 885.18 crore in the second quarter of this year as The City Bank and Prime Bank wrote off total BDT 5.63 billion to bring down their defaulted loans and clean up their balance sheets. The banking sector, however, in the period recovered BDT 1.7 billion from the bad loans they had earlier written off. According to the latest Bangladesh Bank data, banks’ total write-offs of uncollectible loans increased to to BDT 423.2 billion as of June 30 while the figure was BDT 414.37 billion as of March 31 this year. The amount of write-off loans was BDT 412.37 billion as of December 31, 2015. The BB data showed that defaulted loans in the banking sector increased to BDT 633.76 billion as of June 30, 2016 from BDT 513.71 billion as of December 31, 2015. The defaulted loans and the write-off loans together in the banking sector stood at BDT 1056.97 billion at the end of the first half (January-June) of 2016.
All government banks and financial institutions (FIs) will have to contribute to the state-owned workers’ welfare foundation fund (WWFF). The banks and financial institutions now will have to set aside an amount, equivalent to 5.0%, from their net annual profits for the welfare of their own staffs and for contribution to the WWFF as well. According to sources, 10% of the 5% taken out from profits will have to be contributed to the WWFF mandatorily and another 10% with a welfare fund to be formed in each of the banks and FIs. The remaining 80% will have to be distributed among all employees annually. Currently, seven out of eight central bank-regulated scheduled banks alongside specialized ones have no such workers’ welfare funds. They will now be required to form the same under the labor law amended in 2013. Most of the government-owned banks now being run under the labor rules adopted in 2008. Under system introduced in accordance with old law they are not entitled to pensions. But they have provisions for contributory provident funds in their respective organizations.
Government finally decides to take costly World Bank loan
The government has finally agreed to borrow USD 100.0 million from the World Bank’s hard-term ‘Scale-up Facility (SUF)’ fund for an investment- promotion project, officials said. Scaling down the volume of scale-up-facility fund is seen as an outcome of comprehensive negotiations at higher levels after the WB had tried to channel a total of USD 300.0 million through this high-end channel. Government finally decides to take costly WB loan. The Economic Relations Division (ERD) recently requested the World Bank for giving USD 100.0 million from the SUF and the remaining amount of USD 200.0 million through the Bank’s concessional window, IDA, to bankroll the ‘investment promotion and financing facility project-II (IPFF-II)’. Earlier, the sources informed, the Washington-based global lender had wanted to lend the entire USD 300.0 million, needed for implementing the IPFF-II, from its costly SUF fund. The project implementing agency — Bangladesh Bank — made its reservation over the expensive credit from WB’s newly introduced SUF fund in fear of mismatch on the local financial market.
Inflation edged up 4 basis points to 5.57% in the month of October on the back of food price hike. October’s consumer prices are still within the government’s target of 5.8% for fiscal 2016-17. Food inflation accelerated 46 basis points to 5.56% last month, according to data from Bangladesh Bureau of Statistics. However, non-food inflation declined 61 basis points to 5.58%. Rises in prices of rice, vegetables, salt, milk and milk products, edible oil and sugar have fuelled the inflation, particularly food inflation in October, said a senior BBS official.
Finance minister AMA Muhiuth on Thursday rejected the Dhaka Chamber of Commerce and Industry’s demand to reduce Value Added Tax. During a meeting with the e DCCI representatives at his secretariat office Muhith said that the government would stick to its decision to realize VAT at the flat rate of 15.0% from the next year. On November 2, the capital’s small businessmen and shop owners announced that they would intensify their movement from November 20 unless VAT was reduced. At the meeting with the finance minister a DCCI delegation led by vice president Atiqu-E-Rabbani demanded that VAT collection at the flat rate of 15.0% should not be introduced from the next fiscal to protect manufacturers and small traders from ruin. DCCI leader Alauddin Malik pointed out to the finance minister many apparel manufacturers from whom VAT was collected four ties would have to pay 60% VAT if its rate was set at 15% from the coming fiscal.
Lafarge and Holcim have started the merger process of their cement companies in Bangladesh in line with their global amalgamation plan. World’s leading cement makers, France’s Lafarge and Switzerland’s Holcim, merged in July last year to form LafargeHolcim, which owns the majority stake in Holcim Bangladesh. LafargeHolcim and Cementos Molins of Spain together own Surma Holding, which is a majority shareholder of Lafarge Surma Cement in Bangladesh. Last week, Lafarge Surma Cement announced that it is starting discussions with LafargeHolcim to explore the opportunity of combining its business with Holcim Bangladesh. However, Lafarge Surma Cement said no decision has been taken yet on the merger. Lafarge Surma Cement said it will provide updated information to the regulatory authorities and shareholders as and when required, in conformity with applicable laws.
Production in garment factories in major industrial hubs has been hampered over the last three days due to stoppage of gas supply from CNG stations. In the absence of supply from the main lines, the garment makers in Savar, Ashulia and Gazipur were running their units by diverting gas from CNG stations, said Siddiqur Rahman, president of Bangladesh Garment Manufacturers and Exporters Association. But in the last three days, that has stopped, he said, adding that the sector might not reach its target of hitting $50 billion in exports by 2021 if the gas crisis continues. He also touched upon the corporate tax rate of 20 percent for the sector. Rahman also complained that the garment makers are becoming victims of harassments in case of trade license renewal as some officials demand bribes from them.
A new joint venture started its journey to meet the growing demand for liquefied petroleum gas in households, industrial units and the automotive sector. Omera Gas One Ltd, the joint venture between Omera Petroleum of Bangladesh and Saisan Co of Japan, will provide large-scale LPG engineering solutions and supply bulk LPG. The company will also focus on the construction, operation and management of LPG auto gas stations, according to a statement. Omera Petroleum is one of the leading LPG operators in Bangladesh. Having a state-of-the-art import terminal in Mongla, and satellite filling stations in Mongla, Ghorashal, Bogra and Mirsarai, Omera Petroleum imports and markets LPG across the country. Saisan Co, established in 1945, is one of the major LPG distributors in Japan. It has business in Mongolia, Vietnam, Indonesia, Cambodia and Australia.
Bangladesh-Myanmar business lobby wants Special Economic Zones in border districts
The Bangladesh Myanmar Business Promotion Council (BMBPC) stresses the need for setting up special economic zones in Cox’s Bazar and Bandarban dedicated to joint ventures between the South Asian neighbors, reports UNB. Syed Mahmudul Huq, who serves as chair of the council of businessmen from both sides of the border, said in a press statement that the joint ventures could be in a number of areas, while particularly noting the potential of export-oriented agro-based industries, utilising inputs or raw materials from Myanmar. The BMBPC, after the meeting, hosted a reception at a city hotel in honour of the visiting Myanmar delegation led by the permanent secretary to the Ministry of Commerce of Myanmar, Toe Aung Myint, who assured “all-out support” from the government of Myanmar to boost ties between the two countries.
Major Currencies Exchange Rates Movement in Last Seven Days
*CURRENCIES AND COMMODITIES ARE TAKEN FROM BLOOMBERG.
ABOUT DHAKA BANK
Dhaka Bank has truly cherished and brought into focus the heritage and history of Dhaka and Bangladesh from Mughal outpost to modern metropolis. Most of its presentation, publications, brand initiatives, delivery channels, calendars and financial manifestations bear Bank’s commitment to this attachment.